EU could be moving towards taxing Big Tech companies

Bratislava: French Finance Minister Bruno Le Maire said he remains optimistic that the European Union (EU) will be able to reach an agreement by the year end, on taxing digital companies.

A proposal aimed at ensuring tech multinationals pay their fair share in tax was discussed by EU finance ministers last month, amid growing concern that corporations are benefiting from an outdated framework that fails to adequately deal with online businesses. Some countries would prefer to wait for an international approach rather than back an EU-only plan.

France is leading a push for the introduction of an EU tax on revenues of tech giants such as Amazon.com Inc. and Facebook Inc. until the world’s biggest economies can agree on a global system. Some EU governments are concerned that pushing ahead with such a levy — which would target some of the biggest US companies — could exacerbate trans-Atlantic tensions.

“There is a long list of European countries in favour of digital taxation and a very short of countries against,” Le Maire said. “And there are also some countries asking technical questions.”

Those technical questions include whether to link base erosion profit-shifting to digital taxation, Le Maire said.

The commission, the EU’s executive arm, presented a proposal in March for a targeted 3 per cent levy on sales, which would increase the tax bill on large tech companies. The commission also put forward a longer-term approach that would enable countries to tax profits made in their territory, even if the firm doesn’t have a physical presence there.

Tax proposals need the unanimous approval of all EU members before becoming law.